Value of a pancake lense?

I am looking to get a nice camera to take better pictures of my kids and vacation shots, etc. Currently use a P&S but interested in the mirrorless SLRs, specifically the Pen PL1 due to its review that said it was easy to use and a nice transition from a P&S.

I'm curious about the pancake lens' on the market and why they are so popular. I'm currently looking at the Olympus 17mm f/2.8 Lens, but the kit lens also covers this range (14-42mm), so do I really need a pancake lens? All the reviews talk about how great pancake lens' are, but none of them explain the hype around them. Is it just ultra portability?